TOKYO: Toyota reported a smaller-than-expected 77.8 billion yen ($819 million) quarterly loss and expects less red ink for the full year even as the world's top automaker battles plunging sales and a strong yen.

Toyota Motor Corp. said Tuesday it now expects to post a 450 billion yen ($4.7 billion) loss for the fiscal year through March 2010, better than the 550 billion yen ($5.8 billion) it had initially projected.

The result for the April-June quarter underlines that Toyota is getting some results from aggressive cost-cutting. Analysts surveyed by Thomson Reuters had forecast a fiscal first quarter loss of 210 billion yen.

The maker of the Corolla subcompact and Lexus luxury models raised its global vehicle sales forecast for the fiscal year to 6.6 million vehicles, from the earlier 6.5 million, reflecting improved sales in Japan, partly because of government measures to boost green car sales.

Toyota's new Prius gas-electric hybrid has been the top-selling model in Japan, the first time a hybrid has clinched that spot. The Japanese government recently made hybrids tax-free and began a cash-for-clunkers program.

The last fiscal year, Toyota posted its worst loss ever, running up 436.94 billion yen of red ink. For the April-June quarter last year, it had posted a 353.6 billion yen profit.

Toyota had appeared almost unstoppable before the global financial crisis, with sales booming on its reputation for mileage and quality.

The automaker has aggressively cut costs to ride out the economic downturn — cutting jobs and production, trimming managerial pay, reducing investment and foregoing travel and other expenses.

Still, vehicle sales continued to suffer as the recession crushed demand.

Quarterly sales dropped 38.3 percent to 3.836 trillion yen ($40.4 billion) as vehicle sales slipped in almost all regions, including North America, Europe, Japan and the rest of Asia.

"Although we were able to make certain improvements in fixed cost and cost reduction efforts, the decline in vehicle sales and the appreciation of the Japanese yen had a severe impact on our earnings," said Toyota Senior Managing Director Takahiko Ijichi.

Toyota, based in Toyota city, central Japan, lost 140 billion yen ($1.5 billion) during the quarter ended June 30 because of the appreciation of the yen. It lost another 650 billion yen ($6.8 billion) in operating income because of miserable auto sales.